What does internal audit mean on the CPA exam?
Internal audit. An in-house function that evaluates controls and processes and reports to those charged with governance. The external auditor may use its work but keeps sole responsibility for the opinion.
Defined against AU-C 610.
Which CPA exam sections use internal audit?
Internal audit appears in the ISC section of the CPA exam.
Related terms
- audit committee: A subcommittee of the board of directors that oversees financial reporting and the external audit.
- single audit: The combined financial statement and federal compliance audit required of an entity spending above a threshold in federal awards.
- control environment: The governance and management functions and the attitudes, awareness, and actions of those charged with governance and management concerning the entity's system of internal control.
- senior management: The people who direct and control the entity day to day, as distinct from those charged with governance, whose job is to oversee them.
- significant deficiency: A deficiency, or combination of deficiencies, less severe than a material weakness but important enough to merit attention by those charged with governance.
- those charged with governance: The people responsible for overseeing the entity's strategic direction and its accountability, including the financial reporting process.